[00:00:05] Speaker 00: and Conservation Alliance position versus Federal Energy Regulatory Commission. [00:00:50] Speaker 02: Good morning, Your Honors. [00:00:51] Speaker 02: May it please the Court, my name is Jacob Brook, with the Conservation Alliance. [00:00:56] Speaker 02: Really at the crux of this case is whether one pipeline can be treated as two separate pipelines. [00:01:04] Speaker 02: Under the Federal Energy Regulatory Commission and the applicant, Trans-Pecos Pipelines View, [00:01:10] Speaker 02: There are two separate pipelines here. [00:01:11] Speaker 02: There's a 148-mile pipeline that is intrastate, not subject to the Commission's jurisdiction under the Natural Gas Act. [00:01:20] Speaker 02: And there's a separate pipeline, a 1,093-foot section of pipeline extending from the Rio Grande that falls under the Commission's Natural Gas Act Section 3 jurisdiction. [00:01:32] Speaker 02: But the reality is here that there's one functional pipeline. [00:01:36] Speaker 02: Neither segment can exist without the other. [00:01:38] Speaker 02: One applicant, one person, Trans-Pecos pipeline is building both segments. [00:01:45] Speaker 02: Both segments of the pipeline are the same diameter, flow of the same gas. [00:01:50] Speaker 02: And when you review the record, there can only be one logical conclusion that this pipeline is built to export gas from the Oaxaca hub to the Mexican border. [00:01:59] Speaker 01: This is your argument that the entire project isn't an export facility. [00:02:04] Speaker 01: Yes, your honor. [00:02:05] Speaker 01: Where did you raise that on rehearing before the commission? [00:02:09] Speaker 02: Yes, the jurisdictional argument, and I understand that the Natural Gas Act is clear that the argument has to be, or an objection has to be made in front of the Commission on a Request for Rehearing. [00:02:22] Speaker 02: And I would point the court to Blue's Joint Appendix, page 474. [00:02:30] Speaker 02: request for rehearing of Big Big Conservation Alliance and in the first heading the 474 I have 491 I think [00:02:46] Speaker 02: I believe it's 474, but I apologize if I'm correct about that. [00:02:56] Speaker 02: There is another one at 473. [00:02:58] Speaker 01: I'll work off that. [00:03:00] Speaker 02: I see. [00:03:01] Speaker 02: Yes. [00:03:02] Speaker 02: So within the first heading of the request for a hearing by the Commission, [00:03:07] Speaker 02: or by the alliance. [00:03:10] Speaker 02: The alliance states, the commission erred in allowing the applicants requested classification of the system, incorrectly isolating the project into a single jurisdictional border crossing facility under Natural Gas Act section three, and a non-jurisdictional associated facility regulated as an intrastate pipeline. [00:03:25] Speaker 01: which is your statement of the first of two questions that you're presenting for review, but then when you read the substance of the ensuing argument, I'm sorry, I worked off a different one, but you go on for about four pages about how the upstream facility is an interstate one subject to Section 7, and that's the upshot of the argument. [00:03:53] Speaker 01: There's not a word about [00:03:54] Speaker 01: and therefore is subject to Section 3. [00:03:59] Speaker 02: Right, and I understand that. [00:04:01] Speaker 02: And the reality is both Section 3 and Section 7 are of concern here. [00:04:07] Speaker 05: Yeah, but they're totally different arguments in terms of furtive jurisdiction. [00:04:12] Speaker 02: Yes, Your Honor. [00:04:13] Speaker 05: And just to follow up on Judge Kansas, you know, I think it's, don't you think it's significant that [00:04:19] Speaker 05: When FERC rejected your argument that you just quoted, it rejected on the grounds that the pipeline, the upstream segment is carrying intrastate gas. [00:04:34] Speaker 05: In other words, it viewed your argument as a Section 7 argument, and so it said, [00:04:45] Speaker 05: that won't fly because it's only carrying intrastate gas. [00:04:53] Speaker 05: That was their response to your argument. [00:04:56] Speaker 02: Right. [00:04:56] Speaker 02: And again, the Section 7 argument is also relevant to here, but I would also- Yes, I agree. [00:05:01] Speaker 05: That's your other argument. [00:05:02] Speaker 05: I guess we're just pursuing Judge Katz's question about whether your Section 3 argument is forfeited. [00:05:08] Speaker 02: Right. [00:05:09] Speaker 02: And I would refer back to the initial order issued by FERC where [00:05:14] Speaker 02: In the initial order, the agency says we only have jurisdiction over this 1,093-foot section of pipeline because we only regulate facilities at the border under Section 3. [00:05:25] Speaker 01: Right. [00:05:27] Speaker 01: I think they reached a Section 3 issue, but the law is clear. [00:05:30] Speaker 01: You have to re-raise that on re-hearing. [00:05:33] Speaker 02: Right. [00:05:34] Speaker 02: And, you know, this court has said that before that raising an issue in one sentence can be sufficient in the Louisiana Interstate Gas Court versus Fork, I believe that's a 962-F-2nd 37. [00:05:49] Speaker 02: this court said, you know, you raise this, the petitioner raised the issue in one sentence, and even though it was one sentence, that was enough. [00:05:58] Speaker 02: And I'm not aware of any case that's subsequently been decided. [00:06:02] Speaker 06: What I'm curious about, and maybe I just need to be educated on this, [00:06:08] Speaker 06: Your core argument here, which I think complicates both Section 3 and Section 7, is they shouldn't have divided the pipeline into the 1,093 and the rest. [00:06:21] Speaker 06: Now whether the rest is part of an export pipeline, it should have looked at it as a whole thing. [00:06:29] Speaker 06: Now whether the gas that's going to Mexico is intrastate or interstate is your Section 7. [00:06:35] Speaker 06: But as to this argument, if they shouldn't have split it up for Section 7 purposes, wouldn't that also mean they shouldn't have split it up for Section 3? [00:06:48] Speaker 06: Does that argument? [00:06:49] Speaker 02: Yes, I would agree with that. [00:06:50] Speaker 06: The segmentation argument doesn't seem to be distinct from the source of the gas, which is the Section [00:06:56] Speaker 06: Although, as Judge Katz noted, every time you made this point about fragmentation or segmentation, it led into your Section 7 argument, but would the one necessarily implicate the other? [00:07:12] Speaker 02: I think you can view the Section 3 and Section 7 arguments as separate, but it does raise that same general issue of why is the pipeline drawn at 1,093 feet. [00:07:22] Speaker 06: Either way, we have to decide whether it was, do we, this is what I'm trying to ask, to answer your Section 7 challenge, do we have to address whether they properly sort of fragmented [00:07:37] Speaker 06: the, shall I call it, the Mexico part of the pipeline versus what they call the Texas part of the pipeline, or is that not, is that segmentation which you kept arguing about in here? [00:07:47] Speaker 02: Right, well, so I would say this. [00:07:49] Speaker 02: For the Section 7 argument, [00:07:53] Speaker 02: They are going to be flowing interstate gas through that section. [00:07:58] Speaker 02: And if the applicant had said from the very beginning, we are going to flow interstate gas, then I don't think there would be any question that that entire stretch of pipeline from Waha Hub to Mexico would fall under the jurisdiction of Section 7. [00:08:10] Speaker 02: The issue is, the applicant says, we intend to flow interstate gas, and we know we're going to do so. [00:08:18] Speaker 05: And so they utilize it, but that's... What in Section 7, I hear your point, I thought about this too. [00:08:26] Speaker 05: What in Section 7 gives the Commission authority to exercise its jurisdiction on the basis of an intent to flow interstate gas? [00:08:37] Speaker 05: It only has jurisdiction if it's actually [00:08:39] Speaker 05: flowing interstate gas. [00:08:42] Speaker 05: I guess I understand your point if there was evidence that this was all a fraud to avoid NEPA. [00:08:50] Speaker 05: You might have a case. [00:08:51] Speaker 05: But what in the plain language of Section 7 would give for authority to regulate the upstream pipeline if it isn't at the moment flowing interstate gas? [00:09:05] Speaker 02: Right. [00:09:06] Speaker 02: I would point back to this exception that's being utilized, which is that Natural Gas Policy Act Section 311 exception, which is a very limited exception. [00:09:15] Speaker 02: This Court has said, you know, it's not intended to, you know, supplant the Section 7 authority that we have. [00:09:21] Speaker 01: But just to tie down the Section 3 forfeiture point before we get too deeply into the merits of your Section 7 argument, [00:09:32] Speaker 01: Section 7 argument, as you say, turns on the subsequent statute, the Natural Gas Policy Act, the meaning of the words on behalf of how long the pipeline has to be intrastate before it can be used interstate. [00:09:50] Speaker 01: Those issues all seem to be very different from the artificial segmentation point that is the basis for your Section 3 argument, and this is not a case where your Section 7 argument is, there's a pipeline that goes [00:10:05] Speaker 01: hundred feet to the border and then someone wants to say there's a separate project going just across the border. [00:10:13] Speaker 01: Right, so is the question, what makes us... The question is, I don't see how you can use the merits in response to Judge Millett's question. [00:10:24] Speaker 01: I don't see how you can use the merits [00:10:27] Speaker 01: of your Section 7 arguments sort of backdoor into Section 3 preservation. [00:10:35] Speaker 01: I see. [00:10:35] Speaker 01: Because the issues just seem to be very distinct. [00:10:38] Speaker 02: Right, and I would agree that they are distinct. [00:10:40] Speaker 02: The Section 7, Section 3 arguments are distinct. [00:10:43] Speaker 02: I just think that the bar that's trying to be raised here for this request for rehearing, you know, raising the objection is being raised well above what the courts have said and what the statute says. [00:10:57] Speaker 01: It says, you know... Because you think that one sentence is good enough? [00:11:01] Speaker 01: Yes, Your Honor. [00:11:02] Speaker 01: Yes. [00:11:03] Speaker 05: Why don't we just, unless my colleagues have any other questions about Section 3 or 4, why don't we just assume for the purpose of argument this morning that it's forfeited and go on to your Section 7 and 311 arguments? [00:11:17] Speaker 05: Would that be okay? [00:11:18] Speaker 02: Yeah. [00:11:18] Speaker 02: Yes, yes. [00:11:20] Speaker 02: So, in reference back to your earlier question, Your Honor, [00:11:25] Speaker 02: You know, there's no doubt that when the pipeline flows interstate gas, it becomes subject to natural gas section seven. [00:11:32] Speaker 02: So that the issue becomes really this temporal aspect of, do they get to utilize the section 311 exception, you know, by just flowing it for a nominal period of time into a state? [00:11:45] Speaker 02: And, you know, I would point back to the very beginning here, the application. [00:11:49] Speaker 02: The applicant says, after the commencement of intrastate service on Trans-Pecos pipeline system, Trans-Pecos intends also to provide interstate transportation services under Section 311. [00:12:02] Speaker 02: The intent here was very clear that it's going to be flowing interstate gas. [00:12:07] Speaker 05: Okay. [00:12:08] Speaker 05: Let me just ask you a question as a, just a fact question. [00:12:11] Speaker 05: Extra record, I admit, but there's a hint in the intervener's brief about this. [00:12:18] Speaker 05: Subsequent to the opening of the line, did they begin to flow interstate gas and was that approved under 311? [00:12:26] Speaker 02: I believe yes, from my understanding. [00:12:29] Speaker 05: And did your client object to the use of 311 then? [00:12:35] Speaker 05: I'm not raising a waiver question, it's just a fact question. [00:12:39] Speaker 02: Right, no, I'm not aware that my client objected to the 311 issue because their concern was the NEPA analysis, so the EA was the concern. [00:12:52] Speaker 02: I see, I see. [00:12:52] Speaker 02: Yes, so. [00:12:52] Speaker 05: Well, now go ahead then, all right. [00:12:55] Speaker 06: I'm sorry, can I interrupt before you go on, and that is, I apologize. [00:13:02] Speaker 06: You got the question from Judge Tatel about intent to do interstate, but anytime you're authorizing construction, you're talking about intent, because it's not built yet. [00:13:11] Speaker 06: And what I'm trying to figure out is how in advance at the time you're worried about NEPA, is FERC, under your view, supposed to figure out how much [00:13:28] Speaker 06: intra and how much interstate they intend to do, or is this type of challenge really, I hate to say it, but is there almost like a rightness thing? [00:13:37] Speaker 06: We need to wait and see. [00:13:38] Speaker 06: Absent documentation as to here's the contracts we have for this gas. [00:13:44] Speaker 06: Do we really know until they start running whether they are [00:13:48] Speaker 06: interstate with some 311 interstate or this was all a wink and a nod, we'll run a little, we'll flow a little gas around for a couple months and then we're going to be chugging interstate for the rest of the time. [00:14:01] Speaker 06: And how does FERC, how's FERC supposed to deal with that way up front of the NEPA stage? [00:14:06] Speaker 02: Right, and FERC can only, FERC isn't a business of reviewing intentions and plans. [00:14:13] Speaker 02: That's, you know, an applicant shows up, submits plans, and says this is what we intend to do. [00:14:18] Speaker 02: And I suppose FERC can only take the applicant at their word, but their word here was we intend to do this. [00:14:24] Speaker 06: And so... Well, to be fair to them, they said we intend to do 311. [00:14:28] Speaker 06: Now, I don't have a sense of how much, maybe you do, how much [00:14:33] Speaker 06: interstate you can do and still call it 311. [00:14:36] Speaker 06: I assume if 100% of it ends up being interstate, they can no longer hide under 311 or maybe not. [00:14:43] Speaker 06: Maybe if you start interstate, you can sneak it in this way. [00:14:45] Speaker 06: I just don't know how this whole scheme works. [00:14:48] Speaker 02: Right. [00:14:48] Speaker 02: I don't know the exact level of interstate gas that an intrastate pipeline can carry. [00:14:55] Speaker 02: I just [00:14:57] Speaker 02: would refer back to this point that, you know, their intention was clear in what they were intending to do. [00:15:04] Speaker 02: And FERC can only, you know, take the applicant at their word, because until that gas is flowing, you don't know exactly what's going to happen. [00:15:12] Speaker 06: I think there's always... Well, when you say their intention was clear, I mean, the pipeline didn't come in and go, yeah, we're only going to do interstate, but we'll flush the system with some interstate gas first, FERC, so we can call it interstate. [00:15:24] Speaker 06: That might be clear. [00:15:26] Speaker 06: That's not what they... [00:15:27] Speaker 06: did, they've said it's interstate, run interstate, and we intend to add in interstate. [00:15:33] Speaker 06: And it's that very ambiguity that I'm asking you to help me understand how, what did FERC do wrong at this state when it had at least sort of conflicting or dual, maybe not conflicting, dual statements from [00:15:49] Speaker 06: the pipeline. [00:15:50] Speaker 06: How was it supposed to know up front at this early stage? [00:15:53] Speaker 02: Right. [00:15:54] Speaker 02: And I think you would look at the purpose of Section 311, which is meant to be just a limited exception to avoid this wasteful sort of duplication where you have a wellhead that's served only by an intrastate pipeline, [00:16:06] Speaker 02: And an interstate pipeline says, we want to buy from this, rather than requiring the interstate facility to build an entirely new and sort of wasteful pipeline, they can just utilize that existing one. [00:16:17] Speaker 02: That's not what's happening here. [00:16:18] Speaker 02: This is a print. [00:16:19] Speaker 06: It seems almost like what 311 was worried about was when you already had interstate systems up and going. [00:16:25] Speaker 06: And then someone wanted to use it to transport interstate gas. [00:16:28] Speaker 06: That was the waste and vice versa. [00:16:31] Speaker 06: But we're at a construction stage because you have a NEPA claim. [00:16:35] Speaker 06: So I don't think [00:16:37] Speaker 02: Right. [00:16:37] Speaker 02: Well, the NEPA analysis is supposed to consider the environmental impacts that are going to occur. [00:16:43] Speaker 02: And we know that the pipeline is going to flow interstate gas, and it is going to be built as an – or be used as an interstate facility from the – in the future. [00:16:55] Speaker 02: And it's not – this isn't a situation where there's already an existing pipeline, and we're trying to flow interstate gas. [00:17:00] Speaker 02: The intention from the outset is clear. [00:17:03] Speaker 01: We know, I mean the record is murky on this point, but we know a couple of things. [00:17:09] Speaker 01: One is we know FERC made a finding that there was a substantial intrastate gas flow. [00:17:16] Speaker 01: So this was probably not a case where there's like a complete sham. [00:17:22] Speaker 01: There's just no intrastate gas that could support the pipeline. [00:17:26] Speaker 01: Record seems to be unclear on whether there are delivery points within Texas. [00:17:35] Speaker 01: Record seems to be unclear about when the interstate connection will be made. [00:17:41] Speaker 01: Record seems unclear on how much intrastate versus interstate gas will flow. [00:17:48] Speaker 01: So I can easily imagine scenarios in which your 311 objection would be very powerful, and I can easily imagine circumstances where it would not be very powerful. [00:18:01] Speaker 01: And then I look at the FERC order, and all they say is that as of right now, there's only intrastate gas. [00:18:10] Speaker 01: That's non-jurisdictional. [00:18:12] Speaker 01: And then they say, if the company subsequently provides qualifying service under 311, that won't trigger Section 7. [00:18:24] Speaker 01: That is a clearly correct statement of law that absolutely reserves the question of what might or might not qualify under Section 311. [00:18:35] Speaker 01: Right. [00:18:35] Speaker 02: I see I'm out of time, so I'll briefly answer. [00:18:39] Speaker 02: So first, I would say that FERC's characterization is different than the applicant's characterization, where they say, we intend to do this. [00:18:48] Speaker 02: FERC might say, well, this might happen in the future, and we might have these scenarios happening, but the applicant's intent was clear. [00:18:55] Speaker 01: Why is it wrong for them to basically say, look, whatever hard question may arise under 311 when the interstate connection is made in the future, we won't deal with that. [00:19:08] Speaker 01: Right now, it's intrastate. [00:19:10] Speaker 01: That's all we know. [00:19:11] Speaker 01: And we can figure out later whether or not any subsequent interstate gas is qualifying or not. [00:19:18] Speaker 02: Right. [00:19:18] Speaker 02: Well, I would point to another area of the record where it's murky, as you said, where [00:19:23] Speaker 02: There's no reason really given, at least as far as I can tell, why the pipeline is flowing intrastate gas for this limited period of time and then switching to interstate gas. [00:19:34] Speaker 05: But the Commission has findings that it is, in fact, flowing intrastate gas. [00:19:39] Speaker 02: Yes. [00:19:39] Speaker 02: You don't challenge those findings. [00:19:41] Speaker 05: No, do not challenge those findings. [00:19:42] Speaker 05: So that's the problem. [00:19:44] Speaker 05: You've got a pipeline that says it's going to flow intrastate now. [00:19:51] Speaker 05: You've got FERC findings that that's what's happened. [00:19:53] Speaker 05: And it's hard to see how that becomes Section 7 now. [00:19:59] Speaker 05: It might later. [00:20:01] Speaker 02: But that's not before us now. [00:20:03] Speaker 02: Well, but it won't become Section 7 later because the Section 311 exception is being used to swallow the section 7. [00:20:11] Speaker 05: That's why I asked you the earlier question about 311. [00:20:16] Speaker 05: It seems to me that whether 311 is properly used once this pipeline begins to flow interstate gas is a question not yet before us. [00:20:25] Speaker 05: That's a question you would have to raise. [00:20:27] Speaker 05: I mean, we're looking back in time here, right? [00:20:29] Speaker 05: It's all over. [00:20:30] Speaker 05: But assuming they hadn't already started it, the question would be, you could have challenged the [00:20:38] Speaker 05: 311, the invocation of 311, when the interstate gas started to flow, and you could have said then, look, this is really a Section 7 function now, because this is what they intended all along. [00:20:50] Speaker 02: It's just not before us now. [00:20:51] Speaker 02: Well, I think the problem with that, though, is that since this is a NEPA challenge, and Section 311 is exempt from NEPA requirements, [00:21:02] Speaker 02: that at that point, you know, NEPA is not in play when Section 311 is invoked. [00:21:08] Speaker 06: If they were at that later stage to determine, if the pipeline comes up and says, okay, now we're ready to start doing some interstate stuff under 311, and FERC were to decide that, hang on, [00:21:22] Speaker 06: You've only been running for a couple months with interstate, and now you want to do 100 percent interstate or 90 or 80 percent, and you're going to be doing that going forward. [00:21:32] Speaker 06: You're really a Section 7 pipeline. [00:21:38] Speaker 06: Would NEPA kick in at that time? [00:21:39] Speaker 06: Would they have to do a NEPA review when they found it was subject to Section 7? [00:21:43] Speaker 06: Or is this your only shot for NEPA? [00:21:46] Speaker 02: I believe that this is the only shot for NEPA, from my understanding. [00:21:52] Speaker 02: And mainly I say that because FERC has already made that decision within their initial order that Section 3-11 will apply. [00:22:02] Speaker 01: Why? [00:22:03] Speaker 06: In some other case, yeah, why would that, would you, and don't say what FERC says, because you're not representing them. [00:22:08] Speaker 06: So would you, I just don't know, is a later determination that something has become or is about to become a section seven pipeline, a type of major federal action that's going to, or a type of federal action that triggers NEPA. [00:22:23] Speaker 06: And so you can do the NEPA you want then when the record, if it were ever to show, that this really is a section seven pipeline. [00:22:31] Speaker 02: I would say when that Section 7 authorization is issued, that's that action that the agency has taken. [00:22:38] Speaker 02: And so, yes, presumably that would trigger NEPA at that point. [00:22:50] Speaker 04: Good morning, Your Honors. [00:22:51] Speaker 04: Beth Pacella for the Commission. [00:22:53] Speaker 04: I would point, Your Honors, to the Egan Hub case, which is cited by the Commission and also is cited in FERC's brief. [00:23:00] Speaker 04: In that case, that was a show-cause proceeding in which the applicant had asked for Section 311 authorization for an already constructed facility. [00:23:10] Speaker 04: And the commission that was in that facility was going to flow a hundred percent interstate gas. [00:23:17] Speaker 04: So even how it was inter is inter flow a hundred percent. [00:23:21] Speaker 04: Sorry. [00:23:22] Speaker 04: It was going to flow. [00:23:23] Speaker 04: It was an intrastate pipeline that built a. [00:23:26] Speaker 04: a facility it hoped would be a 311 facility, but it explained to the commission it would flow 100% gas, even though it had already been constructed at that point. [00:23:35] Speaker 04: The commission ordered a show-cause proceeding and determined that it was a Section 7 facility and that there did have to be an EPRA review. [00:23:43] Speaker 04: At that time, even though it had already been constructed. [00:23:45] Speaker 04: Which case was that again? [00:23:46] Speaker 04: Egan Hubb. [00:23:47] Speaker 01: When the company [00:23:53] Speaker 01: starts flowing interstate gas and contends that that is under Section 311 rather than Section 7, do they have to come to FERC to get an order to that effect or can they just do it at their peril? [00:24:07] Speaker 04: They can do it and within 30 days they have to notify the commission that they're doing so and they have to provide the commission that notice and it's public and then people can complain about that. [00:24:18] Speaker 04: That's occurred in this case here. [00:24:20] Speaker 01: But if they can just do it, [00:24:23] Speaker 01: absent any further agency action, what is the back-end point at which the NEPA claim could be re-raised as to Section 7? [00:24:36] Speaker 04: The parties can protest that filing. [00:24:39] Speaker 04: That's all in the Commission's regulations, which are included in our appendix. [00:24:43] Speaker 01: So an environmental group that had standing and was concerned about this could go in at that point, protest, [00:24:52] Speaker 01: FERC would be forced to render a decision one way or the other on 311 or 7, and then that action. [00:24:59] Speaker 04: That's right, Your Honor. [00:25:00] Speaker 01: Would trigger NEPA? [00:25:01] Speaker 01: There would have to be a NEPA. [00:25:03] Speaker 04: If the Commission found that it was a Section 7 facility, if it was a new facility that had never undergone NEPA analysis, then the Commission would, just as an Eagan Hub said, we understand that you're already built, but you still have to have your Section 7 proceeding, and you have to do a Section 7C certificate and everything that goes along with that. [00:25:21] Speaker 06: Now, that case you said involved 100% interstate gas. [00:25:25] Speaker 06: It did. [00:25:27] Speaker 06: How does FERC deal with it when you're at this upfront construction stage? [00:25:32] Speaker 06: And your NEPA consequences right now at the construction stage are different, depending on whether this is a Section 7 or not pipeline. [00:25:41] Speaker 06: And you have a business saying we're going to interstate, but we sure plan to add in interstate. [00:25:49] Speaker 06: I didn't see in FERC's decision any sort of rigor on what was demanded of the pipeline as to really when, how much, what defense in this decision or in something you can point me to do we have against [00:26:05] Speaker 04: I don't know if that's a good way to put it, but I think that's a good way to put it. [00:26:21] Speaker 04: and keep doing some interstate. [00:26:23] Speaker 04: They argued they're going to do interstate for a minute and then they're going to do all interstate. [00:26:27] Speaker 04: And so the Commission said, well, we're not going to look at that at this point because what we have now is they're saying that they may do this and [00:26:36] Speaker 04: they may do it, they may not do it. [00:26:39] Speaker 04: But what we have in the record, if you look at JA9, which is the application transmitter letter, and JA364, which is a data response, the Commission had asked specifically, what are you planning on flowing interstate on your system? [00:26:55] Speaker 04: And in both of those filings, [00:26:58] Speaker 04: the pipeline explained that they plan to predominantly flow Texas-sourced natural gas. [00:27:05] Speaker 04: Even if they flowed interstate gas, they still always intended to predominantly flow. [00:27:11] Speaker 04: So we didn't have a circumstance here where FERC was on any notice based on this record that there was a concern that there was subterfuge. [00:27:17] Speaker 04: And as Judge Katzis was pointing out, [00:27:20] Speaker 04: the commission did explain, did find that the filing here would not thwart or frustrate either Section 311 or Section 7, because the commission explained [00:27:35] Speaker 04: That for three reasons. [00:27:37] Speaker 04: One is that, as Judge Katz has pointed out, the record showed there's abundant Texas-sourced natural gas to supply the pipeline without relying on any interstate volumes. [00:27:47] Speaker 04: And that's at, in the hearing order, J.A. [00:27:50] Speaker 04: 558, paragraph 11. [00:27:51] Speaker 04: The commission also said that Trans-Picos had shown its pipeline would exclusively carry Texas-sourced gas when it initiated service. [00:27:59] Speaker 04: And finally, the commission said, this is in a case where [00:28:02] Speaker 04: The only possible use of the facility is to provide interstate service. [00:28:07] Speaker 04: And I think what it's referring to there, even though it didn't cite to Eagan Hub there, is that was what happened at Eagan Hub. [00:28:12] Speaker 04: It could only be an interstate pipeline. [00:28:14] Speaker 06: Those words initiate, and this isn't a case where it's only or even exclusively. [00:28:21] Speaker 06: Those are kind of weasely words. [00:28:24] Speaker 06: What does it take to trigger [00:28:26] Speaker 06: for pushing back harder going, really, what are your intentions here? [00:28:31] Speaker 06: That's what it's worth my concern about. [00:28:34] Speaker 06: how this happens is you have to make these upfront judgments. [00:28:38] Speaker 06: And when you're getting mixed signals from the pipeline, does FERC have to wait until something's in its face, or does FERC have an upfront duty to pin them down? [00:28:49] Speaker 06: No, really, when you say initiate, how long is initiate? [00:28:51] Speaker 06: Is that a couple months? [00:28:52] Speaker 04: The commission did ask them about, specifically about flows, what they intended to flow, and they explained that because they don't produce [00:28:59] Speaker 04: And they're only flowing for other entities. [00:29:01] Speaker 04: They can't be sure what their customers' percentages will be. [00:29:04] Speaker 04: But again, they explain... Isn't that a problem then? [00:29:07] Speaker 04: No, it's not a problem, Your Honor, because again, [00:29:10] Speaker 04: They're not doing any interstate service at the time that the commission is approving this section. [00:29:17] Speaker 06: They're not doing anything because it's getting built. [00:29:19] Speaker 04: No, but they will, and no one's disputing the fact that they would only flow intrastate gas when it initiated service. [00:29:28] Speaker 04: The facts that happened here. [00:29:29] Speaker 06: What does that mean when they initiate? [00:29:31] Speaker 04: When they start to flow gas on the system. [00:29:32] Speaker 06: When they start to flow gas the first day, month? [00:29:35] Speaker 04: In this circumstance, it turned out to be the first, it went into service, the pipeline went into service on. [00:29:44] Speaker 06: Everybody said three months. [00:29:45] Speaker 06: Is that what initiate is? [00:29:46] Speaker 04: It was after two months of being built, the pipeline went into service and flowed only interstate gas. [00:29:54] Speaker 04: And after five months, it started to flow interstate gas. [00:29:57] Speaker 04: And in 20s. [00:29:58] Speaker 06: Well, I thought the pipelines we've said three months. [00:30:01] Speaker 06: Whatever, anyhow, three months, five months. [00:30:04] Speaker 06: Well, is that enough? [00:30:05] Speaker 04: Well, what the statute says is, all the statute says is that the commission can allow any [00:30:13] Speaker 04: interest state pipeline to deliver interest state gas under 311. [00:30:18] Speaker 06: And then we're getting to the wink wink interest state. [00:30:21] Speaker 06: I mean, as Judge Katz was reading, you have a determination as to whether it's qualifying for this treatment. [00:30:29] Speaker 04: That's right. [00:30:30] Speaker 04: And that qualifying determination occurs when the filing is made within 30 days of 311 service starting. [00:30:36] Speaker 04: and people can file protests and complain about that. [00:30:39] Speaker 06: Well, my question is, why isn't there an upfront duty? [00:30:42] Speaker 06: I get that you've got these later stage things, but, you know, what NEPA can do at that point. [00:30:46] Speaker 06: It's a different NEPA analysis. [00:30:47] Speaker 06: It's a different NEPA action. [00:30:49] Speaker 06: You're not addressing the construction problems and their impact on the environment. [00:30:53] Speaker 06: And so why aren't you required to have some more rigor upfront when you've got mixed signals? [00:30:59] Speaker 06: And if it really, if that really means, if it's your position that all they have to do is three months, [00:31:05] Speaker 06: and then it's open season on interstate. [00:31:08] Speaker 06: And the best NEPA you're going to get is on that Section 7 decision later. [00:31:11] Speaker 06: That seems to be quite troubling. [00:31:13] Speaker 04: It's not that it's open. [00:31:15] Speaker 04: I think that that's how the statute is written, and I think that that's how the Commission's rule. [00:31:19] Speaker 04: It's not open season. [00:31:20] Speaker 04: It's that it's very open. [00:31:22] Speaker 04: The whole purpose of Section 311 was to allow existing, it doesn't say existing, but allow interstate facilities. [00:31:29] Speaker 04: And again, the Commission found in its [00:31:31] Speaker 04: 1979 rulemaking regarding Section 311, it specifically said at 3536, if a new pipeline company is planned, it wouldn't fit within the definition of intrastate pipeline until it first engages in transportation. [00:31:48] Speaker 04: So even from the beginning, the commission said, you just have to be an intrastate pipeline. [00:31:52] Speaker 04: You're going to make a filing saying, [00:31:56] Speaker 05: Can you give me an example of a situation in which an applicant in this situation where it says it's going to flow intrastate gas, later it will flow intrastate, can you give me an example of a situation where [00:32:15] Speaker 05: a circumstances of that type of application might cause FERC to say, wait a minute, this looks to us to be like a Section 7 pipeline. [00:32:29] Speaker 04: Yeah, I think it would be where the pipeline would show that it wasn't planning on predominantly flowing intrastate flows, that it was really going to be an intrastate pipeline. [00:32:39] Speaker 04: Egan Hub is an extreme example because it was 100%. [00:32:42] Speaker 05: So if it said we're going to flow intrastate for a month and then do intrastate, FERC would not approve that? [00:32:53] Speaker 04: if it was going to do 100 percent interstate, Your Honor? [00:32:55] Speaker 05: No, 100 percent interstate and then add interstate to it in one month. [00:33:02] Speaker 06: at predominant, can I add? [00:33:03] Speaker 04: Yeah, predominant. [00:33:04] Speaker 04: Still keeping predominant intrastate. [00:33:07] Speaker 04: No, predominant intrastate. [00:33:09] Speaker 04: I don't believe that the commission would approve that. [00:33:11] Speaker 04: Would approve that. [00:33:12] Speaker 04: No. [00:33:13] Speaker 04: I mean, we don't have that circumstance here, and I can't promise you that. [00:33:16] Speaker 04: I don't have a case to cite you for that. [00:33:18] Speaker 05: But I can tell you that the- Would FERC, so suppose you have an applicant. [00:33:24] Speaker 05: Well, take this one. [00:33:26] Speaker 05: Did FERC ask, [00:33:32] Speaker 05: the pipeline here. [00:33:33] Speaker 05: Okay, you said you're going to do this in the future. [00:33:35] Speaker 05: When and how much? [00:33:38] Speaker 04: The commission did ask how much, specifically in one of its data requests. [00:33:45] Speaker 04: And it got an answer to that, which is what led to the predominant answer. [00:33:50] Speaker 04: And that's at, the data request is at JA332, and the response is there as well, and on [00:34:02] Speaker 04: 333, they explain or they will, they can't estimate a precise percentage of gas, but that they will, they expect to, that they will predominantly remain an interest, they will predominantly flow interest rate gas. [00:34:18] Speaker 04: So on the record, the commission did ask that. [00:34:21] Speaker 04: It didn't ask when, but it did ask how much. [00:34:24] Speaker 04: And on top of that, the commission's regulations require [00:34:28] Speaker 04: the pipeline to provide quarterly reports. [00:34:32] Speaker 04: Every Section 311 service provider has to file a quarterly report. [00:34:40] Speaker 04: It's at addendum of FERC's brief A27. [00:34:42] Speaker 04: It's a 311 regulation. [00:34:46] Speaker 04: It's FERC form 549D, and that requires quarterly reports regarding a number of things, including the total volumes transported for each transportation provided under section 311. [00:34:57] Speaker 04: And that filing has to be made at FERC, and it has to be made at the state. [00:35:01] Speaker 04: level as well. [00:35:02] Speaker 05: Okay, and then suppose you find out later after, say, six or eight months of those reports that they're now flowing predominantly interstate gas, then what? [00:35:15] Speaker 04: Then I think the Commission would do what it did in Eagan Hub and it would [00:35:19] Speaker 04: issue a show cause order requiring them to show why they're an intrastate pipeline and not an intrastate pipeline. [00:35:24] Speaker 05: Okay, now suppose the first convinced they're now intrastate, then that triggers NEPA? [00:35:29] Speaker 05: Yes, Your Honor. [00:35:29] Speaker 05: But the pipeline's already built. [00:35:31] Speaker 05: Right, and it was the same. [00:35:32] Speaker 05: So what good is a NEPA analysis at that point? [00:35:34] Speaker 04: The Commission at that point could impose a [00:35:38] Speaker 04: certain changes to how the pipeline is run. [00:35:43] Speaker 04: I understand it couldn't be routing changes, but there could be additional mitigation measures that the Commission could impose. [00:35:48] Speaker 06: Like what? [00:35:50] Speaker 04: Well, the fact is here, the Commission already looked at [00:35:56] Speaker 05: It really pretty comprehensively looked at the... I'm just asking you... It only looked at the environmental impact around the 1,000... No, no, Your Honor. [00:36:06] Speaker 04: That's not correct. [00:36:08] Speaker 05: It looked at the cumulative impacts for the entire... Cumulative impact of the 1,000 feet on the entire pipeline, right? [00:36:17] Speaker 05: But it didn't look at the entire pipeline. [00:36:19] Speaker 04: It looked at the entire length of the pipeline. [00:36:21] Speaker 04: I'm not sure what it, I think that that means it looked the entire length of the pipeline, any, the entire. [00:36:27] Speaker 06: But just as a cumulative effect on the, I think that's what Judge DeVos is saying, on the 1,003. [00:36:31] Speaker 06: Yeah, right. [00:36:32] Speaker 04: Right, but the, that's true, but it really did comprehensively look at it. [00:36:36] Speaker 04: If you look at the whole environmental assessment is about 61 pages. [00:36:41] Speaker 06: I know, but it wouldn't have been analyzed in the environmental effects of building the pipeline. [00:36:45] Speaker 06: other than that 1,093 feet. [00:36:48] Speaker 06: It was a cumulative effects for that 1,093 feet coming from the rest of the pipeline. [00:36:53] Speaker 04: No, Your Honor, I think if you look at the cumulative, if you look at the cumulative impact section starting at JA 417, [00:37:01] Speaker 04: It's the environmental impacts outside of the one mile area where the border crossing facilities are, the entire upstream facilities. [00:37:12] Speaker 04: And so the commission goes through geology and soils, water resources, vegetation and wildlife. [00:37:16] Speaker 01: Did they make a finding of no significant impact as to the entire project? [00:37:23] Speaker 01: It may. [00:37:23] Speaker 01: I didn't see that. [00:37:24] Speaker 04: It didn't make, it didn't do full NEPA review regarding the upstream pipeline, but it did an extensive. [00:37:31] Speaker 01: Well, but full, not in the sense of environmental impact statement, but they didn't make a FONSI finding to establish that the environmental assessment was sufficient. [00:37:42] Speaker 04: They did find that the cumulative impact, Your Honor, of the border crossing facilities on top of the effects [00:37:51] Speaker 04: that would occur from the upstream pipeline would not, they did make a FONSI finding regarding that, Your Honor. [00:38:00] Speaker 04: I'm sorry, they did? [00:38:01] Speaker 04: They did, well, they made the finding as discussed. [00:38:04] Speaker 04: If you look at J419, for example, that's not it. [00:38:10] Speaker 04: If you look at the end of that section, the commission has a cumulative impacts conclusion of 424, and this is, [00:38:20] Speaker 04: considering the impacts that the commission addressed in multiple pages on all of the different impact areas regarding the entire upstream pipeline. [00:38:31] Speaker 04: So the commission's [00:38:33] Speaker 04: Fonzie finding regarding the border crossing facilities here includes consideration of the cumulative impacts of the entire upstream facilities. [00:38:44] Speaker 05: But even FERC had this disclaimer in its analysis. [00:38:48] Speaker 05: It said something like, you know, the EA analysis extended only to areas affected by the Pico crossing and that the rest of the information was collected from the pipeline itself and submitted for background purposes. [00:39:00] Speaker 04: So that's included at, if you look at, it's actually pretty comprehensive. [00:39:05] Speaker 04: That's JA 364. [00:39:07] Speaker 04: In response to the Commission's data request, the pipeline provided this environmental report that starts at page 364, and it's quite comprehensive. [00:39:16] Speaker 04: And so, yes, they provided it, but it's [00:39:19] Speaker 04: provided based on extensive information. [00:39:22] Speaker 04: They didn't just say, hey, in our opinion. [00:39:23] Speaker 05: So under your theory, we don't have to decide any of these complicated questions. [00:39:27] Speaker 05: Your theory is FERC already did a completely satisfactory NEPA analysis. [00:39:33] Speaker 05: Is that right? [00:39:33] Speaker 06: Of the whole pipeline. [00:39:34] Speaker 05: Of the whole pipeline. [00:39:35] Speaker 05: Is that your position? [00:39:37] Speaker 04: I would say that I certainly think that you don't have to do anything. [00:39:42] Speaker 04: So the first part, the answer is easy. [00:39:45] Speaker 04: I don't think you have to make any hard determinations here, and I think we should be affirmed, but I do think that if you're asking me, would the environmental analysis be different or more extensive if it were Section 7? [00:39:57] Speaker 05: Let me know. [00:39:59] Speaker 05: My question was, from what you were saying, it sounded like you were telling us that FERC already did a fully satisfactory need for analysis. [00:40:06] Speaker 04: The Commissioner made that exact finding, Your Honor. [00:40:08] Speaker 04: It did make that finding in the orders. [00:40:10] Speaker 05: Okay, so then why do we have to decide any of these other questions? [00:40:12] Speaker 05: Why do we have to decide Section 3, Section 7? [00:40:15] Speaker 05: If FERC did everything it would have to have done if this was a Section 5 pipeline, then who cares? [00:40:21] Speaker 05: Why do we have to decide this? [00:40:23] Speaker 04: Well, and then I guess you don't. [00:40:24] Speaker 04: But you're not serious about that, are you? [00:40:27] Speaker 04: Well, I mean, I think that the environmental analysis would have been longer. [00:40:32] Speaker 04: It wouldn't have to necessarily be an environmental impact statement regarding the upstream pipeline, because it doesn't seem like how it was built [00:40:40] Speaker 04: and with the mitigation measures. [00:40:43] Speaker 01: Did you, in your red brief, did you ask us to affirm on the ground that even if the entire project under one theory or another were federal, the environmental assessment was good enough? [00:40:57] Speaker 04: No. [00:40:58] Speaker 01: I didn't think so. [00:40:59] Speaker 04: The commission didn't make that specific finding. [00:41:01] Speaker 05: Okay. [00:41:02] Speaker 05: All right. [00:41:03] Speaker 05: So let's go beyond that then. [00:41:05] Speaker 05: That doesn't help you. [00:41:09] Speaker 06: Go ahead. [00:41:11] Speaker 06: So yes, so we asked doesn't need to know at this early stage. [00:41:19] Speaker 06: what they're going to be transporting through the pipeline and when. [00:41:24] Speaker 06: So we know whether it's, so we can tell at this early stage whether this is a potential 311 or a Section 7. [00:41:30] Speaker 06: You said, well, they asked what, you know, what percentages, what's going to be coming through. [00:41:35] Speaker 06: But they didn't ask when. [00:41:37] Speaker 06: And given that 311, as you said, talks about [00:41:41] Speaker 06: what existing intrastate pipelines can do to carry interstate. [00:41:46] Speaker 06: Isn't the when question just as important? [00:41:50] Speaker 04: Well, the commission had an answer to the when question for the purposes that its interpretation of Section 311 was satisfied, that when it initiated service, it would provide 100% intrastate service. [00:42:05] Speaker 06: What does that mean, when it initiated service? [00:42:08] Speaker 04: When it starts flowing gas. [00:42:09] Speaker 06: When it starts, so that's one day. [00:42:11] Speaker 04: It theoretically could be one day. [00:42:13] Speaker 06: It could be one hour. [00:42:15] Speaker 06: Is that FERC's view, really? [00:42:16] Speaker 06: One day? [00:42:17] Speaker 04: Just to be clear, one day? [00:42:19] Speaker 04: The Commission hasn't had, this issue hasn't, that issue hasn't been raised to the Commission that it could be one hour or one day. [00:42:26] Speaker 04: And what the Commission had here was some period of time that they even may. [00:42:31] Speaker 04: I mean, the Commission didn't even know for sure that they would. [00:42:33] Speaker 04: They said our intention is to do so. [00:42:35] Speaker 04: So it's more like this is kind of a declaratory finding of the Commission, that you can be a 311, you would be an interest date pipeline at that point, it could flow 311. [00:42:46] Speaker 05: Suppose the application said, we apply for this pipeline, for the next, for six months, it's going to be 100% interest date, 100%. [00:42:57] Speaker 05: Beyond that point, we will flow interstate gas, but we don't yet know when we'll start that or how much. [00:43:05] Speaker 05: What would FERC do with it? [00:43:07] Speaker 04: I think the Commission would find that, just as it did here, that that would satisfy, for purposes of this in advance finding, kind of like a declaratory order, that that would be enough. [00:43:17] Speaker 05: So then, under that circumstances, after six months, they could start flowing 100% interstate gas. [00:43:23] Speaker 04: Well, if they did so... Then what? [00:43:26] Speaker 05: Well, the commission would know that right away and the commission would find that they were no longer... But then you would be on the point where there would be a meaningful NEPA analysis. [00:43:32] Speaker 05: You'd be... If FERC said, well, we're not going to approve this under 311, we're going to do a NEPA analysis, but at that point, the pipeline's built and up and running. [00:43:41] Speaker 04: Well, I guess my answer to that, and I understand that that's a hypothetical and I see the... Of course it is, but you're asking us... You're asking us... We have to decide this case. [00:43:51] Speaker 05: And we have to interpret the statute, and we need to know what the consequences are of ruling in favor of FERC right now. [00:43:59] Speaker 05: And the answer you just gave, I was pretty comfortable with this until that answer you just gave me. [00:44:05] Speaker 04: Well, Your Honor, I think what it comes down to is no one's rights are gone. [00:44:10] Speaker 04: This order doesn't allow them, they didn't build this pipeline to do interstate [00:44:17] Speaker 04: Transmit transportation. [00:44:18] Speaker 04: There's no nothing in this record that shows this No, I think that's exactly no question we're asking But there's nothing they say this record shows that they're planning on always predominantly flowing intrastate That's why I asked you my questions. [00:44:32] Speaker 05: Suppose they say to you We just don't we we guarantee it's six months intra and after that we guarantee we're gonna do interstate but we don't know either when or how much and [00:44:43] Speaker 04: Okay, so I didn't see it as then indicating to me that wouldn't necessarily indicate. [00:44:48] Speaker 04: And I think the commission probably would ask that question just like it did here. [00:44:52] Speaker 04: What is your intention at that point? [00:44:54] Speaker 05: But if suppose I read that as we just don't know, we can't tell right now. [00:44:59] Speaker 05: It depends on circumstances. [00:45:00] Speaker 05: It depends on the economy. [00:45:02] Speaker 05: It depends on the productivity of the gas fields. [00:45:04] Speaker 05: We just don't. [00:45:04] Speaker 04: Sure. [00:45:05] Speaker 05: Say without that information, we're not going to do this section three. [00:45:09] Speaker 04: If the commission didn't get the same kind of assurance got here, I'm sorry, I misunderstood your question, then the commission would likely say, we don't know what we will decide at the time that you file your section 311. [00:45:20] Speaker 04: No, that's not my question. [00:45:22] Speaker 05: That's not my question. [00:45:23] Speaker 05: My question is that under the hypothetical I gave you, without the precise information that they've said they can't give you, that is when and whether it will be predominant or not, whether FERC at that point would say, we're going to, without that assurance, we have to treat this as a Section 7 pipeline, and we're going to do a full NEPA analysis. [00:45:46] Speaker 04: I just I under the circumstance where they're not getting assurance that they intend to remain really an interest a pipeline. [00:45:55] Speaker 04: You do have to be an interest a pipeline in order to fit under section 3 11 to flow interest a gas or you have to be an interest a pipeline to flow. [00:46:06] Speaker 04: Interstate gas under 311. [00:46:07] Speaker 06: So yeah, I think that you're right your honor that that the Commission Wouldn't be able to do the same thing in that circumstance where it didn't have an assurance of the intention to remain an interstate I guess this hypothetical sounded to me like this case Because I'm still not quite clear what the assurances are the insurance you got on amount was a large percentage Does that mean? [00:46:28] Speaker 07: Majority [00:46:30] Speaker 04: On JA9, it says predominantly Texas-sourced gas. [00:46:35] Speaker 07: I don't... Is that from the... I'm reading from their answer on 332, a large percentage. [00:46:40] Speaker 04: Okay, so JA9, they say Transpecos pipeline is expected to transport predominantly Texas-sourced gas, but may also transport non-Texas-sourced gas. [00:46:52] Speaker 04: And they say the same thing. [00:46:54] Speaker 04: It's on JA364, which is a data response. [00:46:58] Speaker ?: Okay. [00:46:59] Speaker 04: The pipeline explained that [00:47:00] Speaker 04: its principal business is expected to be transportation of predominantly Texas-sourced natural gas. [00:47:06] Speaker 06: And then the initiate, was there any time frame with that? [00:47:12] Speaker 06: So FERC found that that meant sort of just going forward. [00:47:14] Speaker 04: Yeah, this is what do you intend to flow. [00:47:16] Speaker 04: Going forward. [00:47:17] Speaker 04: The question to the pipeline. [00:47:20] Speaker 07: For how long? [00:47:21] Speaker 04: For how long? [00:47:23] Speaker 04: provide us a quantification of the percentage of natural gas that would originate in Texas and the quantity that would be transported under Section 311 authorization and the timing when such authorization would become necessary. [00:47:34] Speaker 04: The Commission did ask those questions. [00:47:38] Speaker 04: And the answer they got was, again explaining, given the proximity [00:47:43] Speaker 04: Given the location of where the pipeline is that they expected to always be able to flow predominantly Because there's so much Texas source gas that they expected to always be able to predominantly flow Texas source gas When I asked you the question about what? [00:47:59] Speaker 05: FERC would do if later it decided 311 was not appropriate because it was flowing predominantly interstate gas, and you said that FERC could attach environmental conditions of some kind, right? [00:48:14] Speaker 05: That's right. [00:48:15] Speaker 05: Wouldn't it make much more sense to say to the pipeline, hey, you said this is going to be predominantly intra, [00:48:21] Speaker 05: And you can't now make it predominantly inter because we haven't been able to do the NEPA review. [00:48:28] Speaker 05: So wouldn't that be a much better incentive to prevent a run around of NEPA? [00:48:35] Speaker 04: I think that the way it would work is it would become a Section 7 [00:48:40] Speaker 04: Interstate pipeline at that point. [00:48:43] Speaker 04: So that's my point. [00:48:44] Speaker 05: Why would you do that? [00:48:45] Speaker 05: Why wouldn't you just say to the pipeline? [00:48:47] Speaker 04: We certify this on the grounds that there was it would not be predominantly interstate and you have to keep it that way You know the Commission would I think the Commission would apply the section 7 certificate? [00:48:59] Speaker 04: consistent with the certificate of public necessity and And thank you. [00:49:05] Speaker 04: Thank you. [00:49:05] Speaker 05: Yeah, we'll hear from the intervener [00:49:17] Speaker 03: Good morning, Your Honor. [00:49:18] Speaker 03: Jeremy Marwell for the Intervenor Trans-Pecos Pipeline. [00:49:23] Speaker 03: If I could begin by answering Judge Tatel's question, I know it's outside the record, but... Completely outside the record. [00:49:29] Speaker 03: With your leave. [00:49:30] Speaker 03: Yes. [00:49:31] Speaker 03: The in-service date was March 31st, 2017. [00:49:34] Speaker 03: The date of the first intra-state flow, so Texas gas, May 24th, 2017. [00:49:42] Speaker 03: The date of the first flow of gas under Section 311, so interstate gas, was August 23rd, 2017. [00:49:49] Speaker 03: So five months after the facilities were placed in service, three months after the beginning of 100%. [00:49:55] Speaker 03: Just three months of interest. [00:49:58] Speaker 01: And since we're outside the record, do we have any idea? [00:50:02] Speaker 01: At present, how much gas is interstate and how much is intrastate? [00:50:08] Speaker 03: Again, with the acknowledgement that it's outside the record, for 2017, 81% intrastate flow. [00:50:15] Speaker 03: What did you say? [00:50:17] Speaker 03: 81%. [00:50:17] Speaker 03: 81% intrastate flow, 19% interstate flow. [00:50:22] Speaker 03: Those are for 2017 numbers. [00:50:24] Speaker 03: I should say, as the commission explained, [00:50:26] Speaker 03: The pipeline reports quarterly to the commission in public filings, the Section 311 flow. [00:50:32] Speaker 03: It also reports to the Texas Railroad Commission the interstate and intrastate flows. [00:50:38] Speaker 03: And when the commission reviews the Section 311 filings, it has in the past issued show cause orders if a pipeline is not as it was presented at the time of the application. [00:50:49] Speaker 03: But if I could say, [00:50:49] Speaker 05: Well, just continuing our outside the record questions for a moment, what would happen, what would FERC do if in one of these periodic reports the interstate flow became predominant? [00:51:02] Speaker 03: Well, I think it would do what it has done in other cases where that is true. [00:51:06] Speaker 03: There are cases cited in the Egan-Hub decision, a Three Rivers case and the Saltville case, where in fact the market has shifted and you could have a pipeline that was once intrastate is now flowing interstate. [00:51:18] Speaker 03: It tends to issue a show cause order where the pipeline has to justify whether the pipeline should now be regulated under Section 7 and if the pipeline can't do that then the FERC initiates a Section 7 proceeding over the pipeline. [00:51:32] Speaker 06: Do you have a sense of what pipelines, how they view this inquiry? [00:51:38] Speaker 06: For example, you've been proceeding just sort of on statistics you gave us and then [00:51:45] Speaker 06: one month for whatever, a technical reason or something, you were actually 98 percent interstate. [00:51:54] Speaker 06: Does that trigger this thing or does it have to be, it's a time frame here that seems to be missing. [00:51:59] Speaker 06: It would seem odd if just a week or a day or even maybe one month would be enough to send you in to go through all these Section 7 proceedings, but I have no sense of [00:52:09] Speaker 06: Timeline on initiate how long it takes to actually be an intra establish yourself as an intrastate one and and how long you'd have to be doing that interstate to really Trigger it not just the volume but the lens so the Commission's orders policing this boundary have tended to adopt a facts and circumstances inquiry that looks at [00:52:28] Speaker 03: not just at the single percentage of flows, but at the customers, at the market, to try to understand whether an intrastate pipeline is a bona fide intrastate pipeline. [00:52:38] Speaker 03: And I think that from the Commission's perspective, there may be a benefit to not having a specific bright line in the sand. [00:52:45] Speaker 03: They are trying to guard against [00:52:47] Speaker 03: evasion of the purposes of the Natural Gas Act and the Section 7 jurisdiction. [00:52:53] Speaker 03: And if I could focus on what was before the commission, what it knew when it was making this decision on this record, at JA 251, in addition to the points the commission made, the pipeline informed FERC in response to one of the data requests that it didn't actually have any contracts yet for interstate interconnects. [00:53:12] Speaker 03: So this would be the thing that you need in order to get interstate gas into the system. [00:53:16] Speaker 03: which I think is relevant for looking at whether this is a bona fide intrastate pipeline. [00:53:23] Speaker 03: And as to evasion, this, in my respectful view, is the opposite of that. [00:53:28] Speaker 03: The pipeline from day one indicated that 311 service was a possibility in the future. [00:53:33] Speaker 03: I should say we view that that is exactly what 311 allows. [00:53:36] Speaker 03: So if there is some [00:53:37] Speaker 03: interstate flow on 311. [00:53:39] Speaker 03: That's what the plain text of the statute allows. [00:53:41] Speaker 03: The statute is not limited by its terms to existing pipelines. [00:53:45] Speaker 03: The Commission was able to make findings that there was abundant Texas-sourced gas. [00:53:49] Speaker 03: They asked the company, where are you going to get the gas? [00:53:52] Speaker 03: They asked for names and locations of receipt points, so the upstream WAHA header. [00:53:59] Speaker 03: And the company repeatedly indicated that it would predominantly flow intrastate gas, which in fact is what happened. [00:54:07] Speaker 03: As to NEPA, the one point would be NEPA follows from an agency's substantive jurisdiction. [00:54:15] Speaker 03: And so I think the first inquiry is, was there jurisdiction under Section 3 or Section 7? [00:54:20] Speaker 03: If so, then the scope of NEPA follows. [00:54:23] Speaker 03: NEPA is a procedural statute that doesn't enlarge or restrict the statute. [00:54:27] Speaker 03: this agency's substantive statute, if there are no further questions. [00:54:32] Speaker 05: Okay, thank you. [00:54:33] Speaker 05: Did Mr. Brooks have any time left? [00:54:36] Speaker 05: Okay, you can take two minutes. [00:54:43] Speaker 02: Thank you, Your Honors. [00:54:45] Speaker 02: answer a question that I believe was brought up earlier about whether NEPA would apply when the Section 311 determination is made and maybe decide to go from Section 311 to Section 7. [00:54:57] Speaker 02: And, you know, upon further reflection, I'm not sure that it necessarily would apply because the triggering language of NEPA is a major federal action significantly affecting the environment. [00:55:08] Speaker 02: It's not clear to me how significantly affecting the environment a pipeline that's already put in the ground would be at that point in time and whether NEPA would apply. [00:55:17] Speaker 06: Well, FERC says it would apply. [00:55:18] Speaker 06: Do you really want to argue with them about that? [00:55:22] Speaker 02: Well, again, that goes back to the... Well, I mean, I think that also raises the question, though, of how meaningful that NEPA analysis will be. [00:55:32] Speaker 02: NEPA has been said over and over again that the point of NEPA is to let the agency review the environmental consequences before it makes a decision. [00:55:42] Speaker 02: And here, if that's the way that this works, if it's... [00:55:46] Speaker 02: do a show cause order and look back at this and see Section 7 applies. [00:55:51] Speaker 02: There's no review before the, you know, the agency has made its decision. [00:55:55] Speaker 02: The pipeline's in the crown and maybe mitigation measures can be imposed later, but the really meaningful analysis and the purpose of NEPA has been subverted there. [00:56:03] Speaker 01: Could I ask a different question about circumstances in which NEPA review seems artificial, which is, this is a case in which we're talking about exports to a country with which the United States has a free trade agreement. [00:56:25] Speaker 01: And the statute, Section 3 in those circumstances says that FERC shall approve without modification or delay. [00:56:38] Speaker 01: It seems like for this kind of case, the NEPA review, regardless of all these other issues, the NEPA review is going to be pro forma and can't possibly stop the project because Congress has essentially ordered FERC to make these approvals. [00:56:55] Speaker 02: Right. [00:56:56] Speaker 02: I don't think NEPA provides a substantive authority to an agency to deny a project just on NEPA basis alone. [00:57:05] Speaker 02: And the natural gas section three allows the agency, allows the commission to, you know, impose conditions and modifications, which, you know, in fact, the agency has done here. [00:57:16] Speaker 01: Well, except in this class of cases, it says approved without modification or delay. [00:57:22] Speaker 02: I apparently the Commission doesn't interpret it that way since they impose these mitigation conditions and things like that, so I can't say anything beyond that. [00:57:32] Speaker 02: I also want to touch on this issue of the predominant test. [00:57:39] Speaker 02: If this pipeline had been approved from the very beginning flowing 19% Interstate gas it would be used as a section 7 jurisdictional Pipeline there's no predominant test as far as I'm aware and introducing one at this stage is is interging something that doesn't exist Thank you, your honor. [00:58:00] Speaker 05: Thank you. [00:58:01] Speaker 05: We will take the case under submission. [00:58:03] Speaker 05: Thank you both all three